Energy price cap forecast to fall again ‘to below £2,000’
Household energy bills are expected to fall again, to below £2,000 a year from October, according to latest forecasts.
Energy industry consultancy Cornwall Insight said it thinks the price cap on energy bills will fall to £1,978.33 from October from July’s £2,074, but rise again from January to £2,004.40, based on Ofgem’s current measures.
However, the regulator is adjusting its definition of the average household’s consumption from October, down from the current 2,900 kWh a year for electricity to 2,700 kWh, and from 12,000 kWh for gas to 11,500 kWh, to reflect consumers using less energy to cut costs in the face of high prices.
Based on Ofgem’s adjusted definitions of average usage, Cornwall Insight has forecast that the regulator will announce price caps of £1,871 a year from October and £1,900 from January.
However the analysts stressed it is “crucial to understand” that a household’s energy bill is based on the energy it consumes, which could be lower or higher than the defined typical household.
Any reductions in the price cap should not diminish the sense of urgency in implementing necessary changes. The protection of vulnerable households from high energy bills remains a pressing issue that requires immediate attention
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “The fall in the average price cap predictions reflects Ofgem’s efforts to align with the evolving energy consumption patterns of typical households, as consumers respond to high prices, energy efficiency measures, weather conditions and other influences by reducing their energy usage.
“While typical household predictions may provide some insight for consumers, households are still facing the challenge of bills that are well above historic levels.
“This situation brings us back to the question of the cap’s purpose – as doubts about the cap’s effectiveness in protecting consumers and its impact on tariff competition become a regular part of energy discussions.
“In light of this, it becomes crucial to explore alternative measures that can better protect consumers, promote fair competition, and ensure affordable and transparent energy pricing for all. The exploration of options such as social tariffs, energy efficiency initiatives, and various other avenues should be prioritised.
“Any reductions in the price cap should not diminish the sense of urgency in implementing necessary changes. The protection of vulnerable households from high energy bills remains a pressing issue that requires immediate attention.”
The latest forecast comes as households have been urged to send meter readings to their energy supplier ahead of Ofgem’s latest price cap coming into effect on July 1.
The regulator announced it is cutting its price cap from £3,280 to £2,074 from Saturday.
Households have been partly shielded from the most recent rise in prices by the Government’s Energy Price Guarantee (EPG), which limited annual energy costs to £2,500 for the average household – subsidising Ofgem’s price cap.
Ofgem’s latest cut means its cap will again govern household bills, resulting in a reduction of £426 from £2,500 to £2,074 – a fall of about 17%.
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